ICICI Direct expects USDINR to find supports at lower levels. Utilise downsides in the pair to initiate long positions.
ICICI Direct's currency report on USDINR
The rupee witnessed some recovery yesterday ending 16 paise higher vs. the US$. However, it is likely to open slightly lower today. Overall, it is expected to remain in a range ahead of the Jackson Hole symposium this week • The US dollar index ended mildly higher against major currencies as Fed minutes showed that not all Fed members were keen for a series of rate cuts. However, investors would be keenly awaiting Fed chair Jerome Powell’s speech this week at Jackson Hole to gain some insights into the Fed’s rate trajectory. CNY is currently trading at 7.066 and is in the vicinity of making a fresh new low since 2008.
Sovereign bond yields fell slightly to 6.57% while market expectation of a stimulus is keeping yield elevated. Domestic yields have seen some divergence from the global trend of a cool off in the last few sessions • US 10-year yields rose 3 bps to end at 1.59% while prospects of an interest rate cut in the September policy have weighed on yields. A sharper cool-off in 10-year yields compared to near term treasuries is giving rise to the risk of a slowdown in the US economy.
Currency futures on NSE
The dollar-rupee August contract on the NSE was at 71.59 in the previous session. Open interest declined 8.09% in the previous session • We expect the US$INR to find supports at lower levels. Utilise downsides in the pair to initiate long positions.
|US$INR August futures contract (NSE)||View: Bullish on US$INR|
|Buy US$ in the range of 71.50 -71.54||Market Lot: US$1000|
|Target: 71.80 / 71.90||Stop Loss: 71.35|
|S1/ S2: 71.50 / 71.35||R1/R2:71.70 / 71.90|